Online TDM Encyclopedia

Road Pricing

Congestion Pricing, Value Pricing, Toll Roads and HOT Lanes

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Victoria Transport Policy Institute

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Updated 6 September 2019

This chapter describes various types of road pricing, which charge motorists directly for driving on a particular roadway or in a particular area. “Congestion pricing” (also called “value pricing”) refers to variable tolls, with higher prices under congested conditions and lower prices under less congested conditions, intended to reduce peak-period traffic volumes to optimal levels. “Toll roads” and “toll lanes” are roadway facilities financed by tolls. “High Occupant Toll (HOT) lanes” are High Occupant Vehicle (HOV) lanes that also allow use by low-occupant vehicles that pay a toll.

Description

Road Pricing means that motorists pay directly for driving on a particular roadway or in a particular area. Value Pricing is a marketing term which emphasizes that road pricing can directly benefit motorists through reduced congestion or improved roadways. Managed Lanes is a general term for various roadway management strategies, including HOV, HOT, and congestion priced lanes.

Economists have long advocated Road Pricing as an efficient and equitable way to Finance Roads other Transportation Programs, and encourage more efficient transportation. Road Pricing has two general objectives: revenue generation and congestion management. They differ in several ways, as compared in the table below.

Table 1 Comparing Road Pricing Objectives (Market Principles)

Revenue Generation

Congestion Management

· Generates funds.

· Rates set to maximize revenues or recover specific costs.

· Revenue often dedicated to roadway projects.

· Shifts to other routes and modes not desired (because this reduces revenues).

· Reduces peak-period vehicle traffic.

· Is a TDM strategy.

· Revenue not dedicated to roadway projects.

· Requires variable rates (higher during congested periods).

· Travel shifts to other modes and times considered desirable.

Different types of Road Pricing are described below.

Road Tolls

Tolls are a common way to fund highway and bridge improvements. Such tolls are a fee-for-service, with revenues dedicated to roadway project costs. This is considered more equitable and economically efficient than other roadway improvement funding options which cause non-users to help pay for improvements (Metschies 2001). Tolling is often proposed in conjunction with road privatization (i.e., highways built by private companies and funded by tolls). Tolls are often structured to maximize revenues and success is measured in terms of project cost recovery. Tolling authorities may discourage development of alternative routes or modes.

Congestion Pricing

Congestion Pricing (also called Value Pricing) refers to variable road tolls (higher prices under congested conditions and lower prices at less congested times and locations) intended to reduce peak-period traffic volumes to optimal levels. Tolls can vary based on a fixed schedule, or they can be dynamic, meaning that rates change depending on the level of congestion that exists at a particular time. It can be implemented when road tolls are implemented to raise revenue, or on existing roadways as a demand management strategy to avoid the need to add capacity. Some highways have a combination of unpriced lanes and Value Priced lanes, allowing motorists to choose between driving in congestion and paying a toll for an uncongested trip. This is a type off Responsive Pricing, meaning that it is intended to change consumption patterns (Vickrey 1994).

Cordon (Area) Tolls

Cordon tolls are fees paid by motorists to drive in a particular area, usually a city center. Some cordon tolls only apply during peak periods, such as weekdays. This can be done by simply requiring vehicles driven within the area to display a pass, or by tolling at each entrance to the area.

HOT Lanes

High Occupancy Toll (HOT) lanes are High Occupancy Vehicle (HOV) lanes that also allow use by a limited number of low occupancy vehicles if they pay a toll. It is a type of Managed Lane (Goodin 2005). This allows more vehicles to use HOV lanes while maintaining an incentive for mode shifting, and raises revenue. HOT lanes are often proposed as a compromise between HOV lanes and Road Pricing.

Vehicle Use Fees

Distance-Based Charges such as mileage fees can be used to fund roadways or reduce traffic impacts, including congestion, pollution and accident risk. A proposal by the UK Commission for Integrated Transport (CFIT 2002) converts existing vehicle registration fees and fuel taxes be replaced by a variable road user charge using GPS-based Pricing Methods, to reduce traffic congestion and more equitably reflect the roadway costs imposed by each vehicle. Pay-As-You-Drive Vehicle Insurance, prorates premiums by mileage so vehicle insurance becomes a variable cost, which gives motorists an incentive to reduce traffic impacts, but provides no additional revenue.

Road Space Rationing

A variation of road pricing is to ration peak period vehicle-trips or vehicle-miles using a revenue-neutral credit-based system. For example, each resident in a region could receive credits for 100 peak-period vehicle-miles each or $20 worth of congestion fees each month (Kalmanje and Kockelman 2004). Residents can use the credits themselves, or trade or sell them to somebody else. The result is a form of congestion pricing in which the benefits are captured by residents rather than road owners or governments.

Table 2 summarizes these different categories of road pricing and their objectives. Some provide revenues, some reduce peak-period congestion, some reduce total traffic impacts (congestion, pollution, accident risks, road and parking facility costs, etc.), and some help achieve a combination of objectives.

Table 2 Road Pricing Categories

Name	Description	Objectives
Road toll (fixed rates)	A fixed fee for driving on a particular road.	To raise revenues.
Congestion pricing (time-variable)	A fee that is higher under congested conditions than uncongested conditions, intended to shift some vehicle traffic to other routes, times and modes.	To raise revenues and reduce traffic congestion.
Cordon fees	Fees charged for driving in a particular area.	To reduce congestion in major urban centers.
HOT lanes	A high-occupant-vehicle lane that accommodates a limited number of lower-occupant vehicles for a fee.	To favor HOVs compared with a general-purpose lane, and to raise revenues compared with an HOV lane.
Distance-based fees	A vehicle use fee based on how many miles a vehicle is driven.	To raise revenues and reduce various traffic problems.
Pay-As-You-Drive insurance	Prorates premiums by mileage so vehicle insurance becomes a variable cost.	To reduce various traffic problems, particularly accidents.
Road space rationing	Revenue-neutral credits used to ration peak-period roadway capacity.	To reduce congestion on major roadways or urban centers.

This table summarizes the major categories of road pricing.

Road pricing impacts vary depending on various factors, including the type of pricing, how it is structured, and the transportation and geographic conditions in which it is implemented. For example, a fixed road toll may do little to reduce congestion if alternative routes and modes are poor, but it may provide significant congestion reductions if transportation alternatives (such as ridesharing, transit and telecommuting) are relatively attractive, and so a modest fee will cause a relatively large mode shift. In some situations, pricing will shift traffic and congestion problems to other routes or areas. Table 3 summarizes the benefits of various pricing strategies. Actual impacts will vary depending on circumstances. For example, in some situations HOT lanes will have greater congestion reduction impacts than others. The point is that these differences should be considered when evaluating and selecting pricing options.

Table 3 Road Pricing Benefits

Strategy	Revenue Generation	Congestion Reduction	Pollution Reductions	Increased Safety
Road toll (fixed rates)	3	2	1	1
Congestion pricing (time-variable)	2	3	2	1
HOT lanes	1	2	1	0
Cordon fees	2	3	1	1
Distance-based fees	3	2	2	2
Pay-As-You-Drive insurance	0	2	2	3
Road Space Rationing	0	3	1	1

Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.

How it is Implemented

Road Pricing is usually implemented by public or private highway agencies or local authorities as part of transportation project funding packages, for transportation demand management, or through privatization of highway construction and operations. Implementation may require approval of other levels of government (for example, U.S. federal law restricts tolling on the Interstate Highway System).

Road Pricing can be implemented at various scales:

· Point: Pricing a particular point in the road network, such as a bridge or a tunnel.

· Facility: Pricing a roadway section.

· Corridor: Pricing all roadways in a corridor.

· Cordon: Pricing all roads in an area, such as a central business district.

· Regional: Pricing roadways at regional centers or throughout a region.

Table 4 illustrates the appropriate scale of various pricing strategies.

Table 4 Appropriate Scale of Pricing Strategies

Strategy	Spot	Facility	Corridor	Cordon	Regional
Toll Roads (fixed rates)	X	X	X
Congestion Pricing (time-variable)	X	X	X	X
HOT lanes	X	X
Cordon Fees			X	X
Distance-Based Fees					X

A variety of Pricing Methods can be used to collect fees, as summarized in Table 5. Newer electronic pricing systems tend to have lower costs, greater user convenience, and more price adjustability, making Road Pricing more feasible.

Table 5 Summary of Fee Collection Options (Pricing Methods)

Type	Description	Equipment Costs	Operating Costs	User Inconvenience	Price Adjustability
Pass	Motorists must purchase a pass to enter a cordoned area.	Low	Low	Medium	Poor to medium.
Toll Booths	Motorists stop and pay at a booth.	High	High	High	Medium to high.
Electronic Tolling	An electronic system bills users as they pass a point in the road system.	High	Medium	Low	High
Optical Vehicle Recognition	An optical system bills users as they pass a point in the road system.	High	Medium	Low	High
GPS	GPS is used to track vehicle location. Data are automatically transmitted to a central computer that bills users.	High	Medium	Low	High

This table summarizes various pricing methods. Newer methods tend to have lower costs, greater convenience and price adjustability, making them more cost effective and politically acceptable.

Road pricing should be implemented in conjunction with improved transportation options, so consumers have viable alternatives. For example, congestion pricing can be implemented with Transit and Rideshare and Flextime improvements so motorists have more ways to avoid driving on the priced road. This reduces user inconvenience, reduces the fee needed to achieve a given reduction in vehicle traffic, and increases its effectiveness at reducing traffic congestion.

Wit and Humor

“I’ll tell you how to solve Los Angeles’ traffic problems. Just take all the cars off the road that aren’t paid for.” -Will Rogers

Travel Impacts

Road Pricing travel impacts depend on the type and magnitude of fees, where it is applied, what alternative routes and modes are available, and what is assumed to be the alternative or Base Case (TDM Evaluation).

· Pricing roads that would otherwise be free can shift vehicle travel to unpriced routes, alternative modes and closer destinations, and reduce vehicle trip frequency.

· Congestion Pricing (i.e., higher rates during peak periods) can cause vehicle trips to shift from peak to off-peak periods.

· If Road Pricing is used to fund roadway capacity expansion that would not otherwise occur, it may increase total vehicle travel (Rebound Effect).

· Road Pricing reduces total vehicle travel if used to fund roadway capacity expansion that would otherwise be unpriced (funded through other taxes).

· The better the travel alternatives (transit, ridesharing and cycling), the more Road Pricing will cause mode shifts.

The travel impact of HOT lanes depends on the price structure used. If the price is too low, the facility will experience congestion, reducing the performance for both single-occupant vehicle users and HOV users, resulting in reduced transit and ridesharing. It is therefore important for the sake of overall transportation system efficiency that HOT facilities be managed to favor HOV performance.

Several studies have investigated the sensitivity of vehicle travel to road tolls (Transport Elasticities). These indicate a price elasticity of –0.1 to –0.4 for urban highways (i.e., a 10% increase in toll rates reduces vehicle use by 1-4%), although this can vary depending on the type of toll, type of traveler and other factors (Spears, Boarnet and Handy 2014). Recent experience indicates that automobile travel tends to be quite sensitive to tolls, resulting in less revenue than predicted on many toll road projects (Litman 2012; NCHRP 2006; Parsons Brinckerhoff 2012; Prozzi, et al. 2009; Williams-Derry 2011). A state-preference survey of suburban automobile long-distance commuters indicates that financial incentives are the most effective strategy for reducing automobile trips. A US$3.00 per round-trip road toll is predicted to reduce automobile commuting by 25% (Washbrook 2002). One study estimates that congestion pricing can reduce up to 5.7% of VMT and up to 4.2% of vehicle trips in a region (Apogee 1994). Williams-Derry (2011) concludes that toll roads usually generate less revenue than forecasted because motorists are more price sensitive than most models assume.

Table 6 Estimated Fee To Reduce Vehicle Trips 10% (May and Milne 2000)

Type of Road Pricing	Fee Required to Reduce Trips 10%
Cordon (pence per crossing)	45
Distance (pence per kilometer)	20
Time (pence per minute)	11
Congestion (pence per minute delay)	200

Road pricing impacts and benefits depend on the price structure. Ubbels and Verhoef (2006) predict that road pricing in The Netherlands would reduce car trips by 6% to 15%. A flat kilometre fee primarily affects social trips and tends to cause total trips to decline and shifts to nonmotorized modes. A peak-period fee primarily affects commute trips, and tends to cause a combination of shifts in time and mode, and working at home. May and Milne (2000) used an urban traffic model to compare the impacts of cordon tolls, distance pricing, time pricing and congestion pricing. They found significant differences in the effectiveness that particular size fee would have in achieving TDM objectives. Table 6 shows the estimated price level required to achieve a 10% reduction in regional vehicle trips. They conclude that time-based pricing provides the greatest overall benefits, followed by distance-based pricing, congestion pricing and cordon pricing.

Table 7 Impacts of Congestion Pricing, Year 2010 (Harvey and Deakin 1997, Table B.6)

Region	Avg. Fee	VMT	Trips	Delay	Fuel	ROG	Revenue
Bay Area	13¢	-2.8%	-2.7%	-27.0%	-8.3%	-6.9%	$2,274
Sacramento	8¢	-1.5%	-1.4%	-16.5%	-4.8%	-3.9%	$443
San Diego	9¢	-1.7%	-1.6%	-18.5%	-5.4%	-4.2%	$896
South Coast	19¢	-3.3%	-3.1%	-32.0%	-9.6%	-8.1%	$7,343

Avg. Fee = average congestion fee per mile applied to vehicle travel on congested roads. VMT = change in total vehicle mileage. Trips = change in total vehicle trips. Delay = change in congestion delay. Fuel = change in fuel consumption. ROG = a criteria air pollutant. Revenue = annual revenue in millions of 1996 U.S. dollars. See report for additional notes and data.

A small reduction in urban-peak traffic volumes can provide a large reduction in congestion delays. Deakin and Harvey (1997) model the effect of congestion pricing on transportation impacts in four major urban regions in California. Table 7 summarizes their results for the year 2010. It indicates, for example, that in the South Coast (Los Angeles) region, a fee averaging 19¢ per mile driven in congested conditions would reduce total vehicle trips by about 3.3%, but congestion delay would decline by 32%. In an experiment involving time- and mileage-based pricing. O’Mahony, Geraghty and Humphreys (2000) found that motorists reduced peak-period trips by 22%, and total trips by 6%, peak mileage by 25% and total mileage by 12%.

Table 8 Travel Impact Summary

Travel Impact	Toll Road Funding	Congestion Pricing	Comments
Reduces total traffic.	1	2	Impacts on total travel depend on the price structure and the quality of alternatives.
Reduces peak period traffic.	2	3	Fixed tolls cause moderate peak reductions.
Shifts peak to off-peak periods.	0	3	Fixed tolls provide no incentive to shift.
Shifts automobile travel to alternative modes.	2	3	Congestion pricing supports use of travel alternatives, toll roads do not.
Improves access, reduces the need for travel.	-1	0	Additional roadway capacity can encourage low-density urban expansion.
Increased ridesharing.	2	3	Encourages ridesharing and may fund rideshare programs.
Increased public transit.	2	3	Encourages transit use and may fund transit improvements.
Increased cycling.	1	2	Encourages cycling and may fund cycling improvements.
Increased walking.	1	2	Encourages walking and may fund pedestrian improvements.
Increased Telework.	1	2	Encourages telework.
Reduced freight traffic.	1	1	May have some effect.

Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.

Benefits And Costs

Road Pricing benefits and costs vary depending on travel impacts, what is assumed to be the alternative, and other factors (Pricing Evaluation).

A basic economic principle is that markets tend to be most efficient and equitable if consumers bear the costs of the goods they consume. Currently in North America, road user fees only cover about half of roadway expenditures (Henchman 2013), and less on congested urban corridors where roadway construction costs are particularly high. Road pricing insures that users of a road bear its costs.

Congestion Pricing is a particularly effective Congestion Reduction strategy. Many economists consider urban traffic congestion virtually unsolvable without some sort of congestion pricing. Shifting vehicle traffic to other routes or time provides few other benefits, causes spillover impacts (increased traffic on other roads), and by increasing traffic speeds can ncrease crash damages. These congestion reduction benefits are potentially very large because congestion pricing is usually applied on the most congested urban roadways where economic costs (including driver stress and freight delays) are particularly high. By reducing total vehicle travel and traffic congestion, road pricing can provide significant energy conservation and emissions reductions (ICCT 2010).

Road Pricing that reduces total vehicle travel can reduce road and parking facility costs, increase road safety, protect the environment, encourage more efficient land use, and improve community Livability. Congestion pricing both supports and is supported by Smart Growth policies. Guo, et al. (2011) analyzed data from the 2006-2007 Oregon Road User Fee Pilot Program, which charged motorists for driving in congested conditions. The study found that households in denser, mixed use, transit-accessible neighborhoods reduced their peak-hour and overall travel significantly more than comparable households in automobile dependent suburbs, and that congestion pricing increase the value of more accessible and multi-modal locations.

The central London congestion charging scheme resulted in a 12% reduction in total vehicle–kilometres, and a 30% reduction in car traffic, with a 28% reduction in crashes (Richards, 2006). Moped and motorbike journeys increased 10-15%, while crashes decreased 4%, and pedestrian crash injuries declined by 6%.

Green, Heywood and Navarro (2015) compared ten years of road accident data for London’s congestion charge zone with twenty other British cities. Prior to the congestion charge central London’s weekday traffic accident rate was higher than peer cities, but after the charge was implemented it declined by 40%. They found that, in addition to reducing the total number of accidents in that district, average accident rate per million vehicle-miles declined approximately 22%, and accidents in other nearby areas, times or travel modes, suggesting that it leverages additional reductions in regional vehicle traffic and crashes. They found:

Total vehicle travel in the 8-square-mile charging zone declined 14%.
Total reported traffic accidents in the charging zone declined by a third.
Accident rates within the zone declined from 4.51 to 3.51 per million vehicle-miles, a 22% reduction, and traffic casualties (somebody is killed or seriously injured), declined by 25%, indicating that increased travel speeds enabled by reduced congestion do not increase crash severity.
Crash rates declined by 16% in the concentric zones up to four kilometers outside the charging zone, indicating that congestion pricing reduces total vehicle travel, rather than simply shifting traffic and crashes elsewhere.

Road Pricing that funds additional highway capacity can increase total automobile travel (Rebound Effects), and so may increase downstream traffic congestion, parking costs, crashes, pollution, and sprawl. Expanding highway size and traffic volumes tends to reduce the livability of communities that it cuts through. Ragazzi (2006) argues that highway privatization can result in fragmented planning and inefficient pricing.

Value Pricing and HOT lanes can increase Transportation Options. On unpriced roads, travelers have no alternative to being delayed by congestion. Value Pricing and HOT lanes allow travelers to choose between driving in congestion, avoiding congestion by ridesharing, or avoiding congestion by paying a toll. This lets individual consumers choose the option that best meets their needs for a particular trip. It also tends to improve transportation choice indirectly by increasing demand for ridesharing and transit services.

Road Pricing increases motorists’ direct costs, but these are economic transfers; payments by motorists are offset by revenues to the tolling agency or government (Evaluating Pricing). Overall consumer impacts from Road Pricing depend on how revenues are used (Parry, 2008). If returned as rebates or reductions in other taxes, or used in other ways that consumers value, consumers may be no worse of financially.

Resource costs are primarily the transaction costs to highway agencies and to users of collecting fees. Toll collection costs range from about 10% of total tolling revenue for electronic toll collection, up to 40% for tollbooths. Toll collection that requires motorists to stop at booths causes motorists delays and increases energy consumption and air pollution. New electronic tolling can reduce these transaction costs (Pricing Methods).

Table 9 Benefit Summary – Toll Funded Roads

Objective	Rating	Comments
Congestion Reduction	3	Increases road capacity and reduces demand.
Road & Parking Savings	-2	Increases total vehicle travel and facility costs.
Consumer Savings	-1	Increases direct consumer costs, but reduces indirect road costs.
Transport Choice	1	Increases motorists’ choice if untolled roads are also available or if pricing improves travel alternatives.
Road Safety	-1	Induced travel and higher traffic speeds can increase crash costs.
Environmental Protection	-1	Induced travel increases emissions.
Efficient Land Use	-1	Induced travel can increase sprawl.
Community Livability	-1	New urban highways may have negative impacts.

Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.

Table 10 Benefit Summary – Congestion Pricing

Objectives	Rating	Comments
Congestion Reduction	3	Increases road capacity and reduces peak-period demand.
Road & Parking Savings	3	Reduces total vehicle travel and avoids the need to add capacity.
Consumer Savings	-1	Increases consumer direct costs, but overall impacts depend on how revenues are used.
Transport Choice	3	Increases motorists’ choice and improves travel alternatives.
Road Safety	2	Reduced vehicle travel reduces crashes.
Environmental Protection	2	Reduced vehicle travel reduces emissions.
Efficient Land Use	2	Reduced vehicle travel reduces sprawl.
Community Livability	2	Reduced vehicle travel increases community livability.

Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.

Equity Impacts

Road Pricing has a variety of equity impacts (Pricing Evaluation). It tends to increase horizontal equity by charging users for the roadway costs they impose, and reducing cross subsidies among motorists (from those who don’t drive during peak periods to those who do), since only about half of U.S. roadway costs are paid by motorist user fees (Henchman 2013), and even less on major urban roadways where construction costs are particularly high, causing users of less costly roads to cross-subsidize those costs. Road pricing insures that users of a road bear its costs.

Some critics argue that Road Pricing represents “double taxation” since motorists pay road user fees such as fuel taxes and vehicle registration fees. However, existing road user charges in North America are insufficient to cover total roadway costs (Dutzik, Davis and Baxandall 2011; Henchman 2013). Such fees are far lower than the marginal cost of driving under urban-peak conditions. Increasing urban highway capacity typically costs 10-50¢ per peak-period vehicle-mile (Transportation Costs). Direct user fees are generally the most equitable way to fund improvements because they can represent the actual cost of providing capacity on a particular stretch of roadway, and so avoid cross-subsidies from motorists who do not drive under such conditions.

Road Pricing can impose a financial burden on motorists dependent on that roadway. This impact generally declines over time as consumers adjust to new prices, and can be minimized if Road Pricing implementation is predictable and gradual. For example, if it became public policy that all new suburban highway capacity expansion projects will be paid through user tolls, people could take that into account when considering whether to purchase a home that would require frequent highway trips.

Road tolls represent a greater financial burden on lower-income motorists than on higher-income motorists, but they are not necessarily more regressive than other road funding options, such as fuel taxes or general taxes (ITF 2018). Peak-period automobile commuters have about twice the average incomes as commuters who user other modes or who do not work (Cortright 2017), which suggests that road tolls are progressive, or less regressive than other transportation fees such as transit fares. Whether a toll is regressive overall depends on how much lower-income consumers drive on such highways, the quality of travel alternatives, and how revenues are used (Burris, et al. 2013; GAO 2012; Litman 1996; Manville 2017; Parry 2008; Schweitzer and Taylor 2008).

If Affordability is a major concern, Road Pricing programs can include discounts or a certain number of free passes provided to lower-income households. There is a long history of incorporating vertical equity objectives into transportation policies (i.e., insuring that lower income people have Basic Access). Adam Smith, one of the founders of modern economics, wrote that, “When the toll upon carriages of luxury coaches, post chaises, &c. is made somewhat higher in proportion to their weight than upon carriages of necessary use, such as carts, wagons, and the indolence and vanity of the rich is made to contribute in a very easy manner to the relief of the poor, by rendering cheaper the transportation of heavy goods to all the different parts of the country.” (Smith, 1776, chapter 5).

Rajé (2003) examines the equity impacts of road pricing and workplace parking levies with focus groups of vulnerable groups (low income, elderly, disabled, urban residents) and travel survey analysis. The results indicate that automobile pricing impacts depend on how revenues are used, how prices are structured and priced areas are defined; and the quality of travel options available, and that citizen support for road pricing increases if they feel that these equity concerns are addressed.

Even lower-income motorists are sometimes willing to pay for time savings, indicating that pricing strategies that prioritize trips can provide a transportation choice that is valued by motorists of all income levels. For example, user surveys of the SR 91 Value Priced lanes, in which motorist can pay a premium to drive on a less congested lane, show that about a quarter of the lowest-income class of motorist (less than $25,000 annual income) use the lanes on a frequent basis (Sullivan 1998). Paying such a toll may be worthwhile to allow a working parent to avoid fines at their childcare center or to reach an urgent appointment. Even if a particular motorist seldom uses such an option, its existence may be highly valued, just as ship passengers value having lifeboats that they have will never actually be used (Evaluating Transportation Diversity).

Road Pricing can also benefit transportation-disadvantaged people by reducing the subsidies they pay toward highways and by increasing their travel options (Kain 1994). King, Manville and Shoup (2007) recommend that road pricing revenues be returned to cities on a per capita basis as compensation for environmental impacts that vehicle traffic imposes on local residents, and as a way to increase vertical equity. HOT lanes in particular can provide equity benefits by improving mobility options for transit and rideshare users. Congestion pricing and HOT facilities can improve basic mobility by giving priority to high value trips.

Table 11 Equity Summary – Toll Funded Roads

Criteria	Rating	Comments
Treats everybody equally.	-1	Mixed. Impacts some people more than others.
Individuals bear the costs they impose.	3	Yes. Charges users directly for their road costs.
Progressive with respect to income.	-1	Regressive, but not necessarily more regressive than other funding options. Depends on travel alternatives.
Benefits transportation disadvantaged.	1	May improve travel alternatives.
Improves basic mobility.	2	Improves access by automobile and other modes.

Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.

Table 12 Equity Summary – Congestion Pricing

Criteria	Rating	Comments
Treats everybody equally.	-1	Mixed. Impacts some people more than others.
Individuals bear the costs they impose.	3	Yes. Internalizes congestion externalities.
Progressive with respect to income.	0	Mixed. Depends on travel choices and how revenues are used.
Benefits transportation disadvantaged.	3	Improves transit and ridesharing.
Improves basic mobility.	3	Improves access by automobile and other modes.

Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.

Applications

Toll funding is appropriate for any major bridge or highway improvement, particularly if the improvements primarily benefit higher-income households, so there is little equity justification for subsidies. However, several studies suggest that the potential market for private toll roads is limited (GAO 2004). Congestion pricing and HOT facilities are justified on any roadway that experiences congestion, such as urban highways and major commercial centers.

Table 13 Application Summary - Toll Funded Roads

Geographic	Rating	Organization	Rating
Large urban region.	3	Federal government.	3
High-density, urban.	3	State/provincial government.	3
Medium-density, urban/suburban.	3	Regional government.	3
Town.	2	Municipal/local government.	2
Low-density, rural.	2	Business Associations/TMA.	1
Commercial center.	2	Individual business.	1
Residential neighborhood.	1	Developer.	1
Resort/recreation area.	2	Neighborhood association.	0
		Campus.	0

Ratings range from 0 (not appropriate) to 3 (very appropriate).

Table 14 Application Summary – Congestion Pricing

Geographic	Rating	Organization	Rating
Large urban region.	3	Federal government.	3
High-density, urban.	3	State/provincial government.	3
Medium-density, urban/suburban.	3	Regional government.	3
Town.	1	Municipal/local government.	2
Low-density, rural.	1	Business Associations/TMA.	1
Commercial center.	3	Individual business.	0
Residential neighborhood.	1	Developer.	0
Resort/recreation area.	2	Neighborhood association.	0
		Campus.	0

Ratings range from 0 (not appropriate) to 3 (very appropriate).

Relationships With Other TDM Strategies

Road Pricing supports most other TDM strategies, including Public Transit Improvements, Rideshare Programs, Parking Management, Parking Solutions, Commute Trip Reduction, Park & Ride and Flextime. It is supported by Institutional Reform, and is a type of Transportation Market Reform. The Pricing Evaluation discusses factors to consider when evaluating Road Pricing options.

Stakeholders

Implementation usually requires the leadership of local or regional transportation agencies, plus support from local political officials and user groups. Road Pricing is sometimes implemented by private companies or public-private partnerships that build new highways. Other stakeholders include motorists, professional drivers (truck and taxi drivers), and residents of areas that may be significantly impacted.

Barriers To Implementation

A major barrier to Road Pricing is opposition from user groups who consider themselves worse off if they are forced to pay to use currently unpriced roads. Consumers generally oppose new or increased prices (Schade and Schlag 2000). The trucking industry and automobile associations have generally opposed Road Pricing, although this may change as urban congestion increases (Walker 2011). Many citizens distrust government agencies and fear that Road Pricing will be implemented primarily to increase government revenue, and used inefficiently. Current financing systems, with dedicated funds for highway capacity expansion available as matching grants from other levels of government discourage the use of tolling. In the past, some toll road planners exaggerated demand and potential revenues, resulting in financial failure, which has made toll road financing difficult (Vassallo and Sánchez-Soliño 2007; Bain 2009).

Best Practices

Below are recommended best practices for using Road Pricing to achieve TDM objectives. Also see congestion pricing guidelines by Vickrey (1992).

· Choose Pricing Methods that are cost effective to implement, convenient to users, and accurately reflect the costs imposed by each trip.

· Use time-variable tolls, with higher rates during peak periods and lower rates during off-peak periods, to reduce congestion.

· Apply congestion pricing on existing roads, not just new facilities.

· Price individual trips. Avoid significant discounts for frequent users (this contradicts TDM objectives).

· Encourage development of travel alternatives, including flextime, ridesharing, transit improvements and bicycle facilities.

· Integrate pricing with other TDM strategies that increase traveler choice and provide additional incentives to use alternative modes in the same area.

· Insure that Road Pricing decisions are transparent, built on public participation and trust.

· Address equity concerns by insuring that all groups receive benefits, either through rebates or improved travel choices.

· Make prices as predictable as possible.

Road Pricing Principles

An effective and fair road pricing system should reflect the following principles.

User Perspective

· Easy for users to understand.

· Convenient – does not require vehicles to stop at toll booths.

· Transport options – consumers have viable travel options available (i.e., alternative modes, travel times, routes, destinations).

· Payment options – easy to use with multiple payment options (cash, prepaid card, credit card, etc.)

· Transparent – charges evident before trip is undertaken.

· Anonymous – privacy of users is assured.

Traffic authority Perspective

· Traffic impacts – does not require each vehicle to stop at toll booths or in other ways delay traffic.

· Efficient and equitable – charges reflect true user costs.

· Effective – reduces traffic congestion and other transportation problems by changing travel behavior.

· Flexible – easily accommodates occasional users and different vehicle types.

· Reliable – minimal incorrect charges.

· Secure and enforceable – minimal fraud or non-compliance.

· Cost effective – positive return on investments.

· Implementation – minimum disruption during development phase. Can be expanded as needed.

Society’s Perspective

· Benefit/cost – positive net benefits (when all impacts are considered).

· Political acceptability – public perception of fairness and value.

· Environment – positive environmental impacts.

· Integrated – same charging system can be used to pay other public service fees (parking, public transit, etc.)

Examples and Case Studies

London Congestion Pricing (www.vtpi.org/london.pdf; Richards, 2006)

Since 17 February 2003 the city of London has charged a £5 daily fee for driving private vehicles in an eight square mile central area during weekdays as a way to reduce traffic congestion and raise revenues for transport improvements. An automated system checks vehicles entering the charging zone against a database of motorists who have paid the fee. Despite considerable controversy the program was implemented without major problems, and has substantially reduced traffic congestion, improved bus and taxi service, and is generating revenues. Vehicle traffic speeds have increased, bus transit service has improved, while accidents and air pollution have declined in the city center. Public acceptance has grown and there is now support to expand the program to other parts of London. In 2004 Mayor Livingstone was reelected, largely due to the success of the congestion pricing program. This is the first congestion pricing program in a major European city, and its success suggests that congestion pricing may become more politically feasible elsewhere.

National Road Pricing

The National Surface Transportation Infrastructure Financing Commission (NSTIFC 2009) evaluated various transportation financing options and recommended fuel tax increases for the medium-term and mileage-based road user fees as a long-term funding source because it is considered more efficient (it can reflect when and where a vehicle is drive) and more durable (since it will not decline with increased vehicle fuel efficiency and shifts to alternative fuels).

I-15 Electronic HOT Lanes (http://argo.sandag.org/fastrak)

Since 1996 a 13-km reversible HOV facility in the median of Interstate15 in San Diego has been opened to solo drivers who pay a toll using electronic transponders. Since March 1998, users of the Express Lanes have been charged a toll that varies dynamically with the level of congestion. Several variable message signs are posted in the areas prior to the entrance to the Express Lanes. These indicate the highest toll users should expect to be charged, with tolls ranging from 50 cents to $4 per one-way trip under regular conditions, and sometimes as high as $8. Variable message signs inform drivers of the going rate. Depending on traffic in the Express Lanes the fee may be lower than the posted schedule. Traffic flow is monitored in the Express Lanes to ensure that service on the HOV lanes is maintained at free-flow conditions (LOS C). Media response thus far has generally been positive. Some of the program’s revenues are used to fund a new express bus service.

SR 91 Express Toll Lanes (www.91expresslanes.com)

State Route 91 in Orange County, California has 10-miles of express toll lanes privately constructed and built by the California Private Transportation Company (CPTC), and funded by variable electronic tolls. CPTC contracts with Caltrans and the California Highway Patrol for maintenance and police services. The 91 Express Lanes uses “FasTrak” electronic transponders to collect tolls that vary from $0.75 to $3.50 per trip, depending on level of congestion. In 1998 more than 9 million tolled trips were made on the facility, with revenues of approximately $20 million. SR91 Project Evaluation (http://ceenve.calpoly.edu/sullivan/sr91/sr91.htm).

Highway 407 (www.407etr.com)

Highway 407, the Express Toll Route (ETR), is a multi-lane, electronic highway running 69 kilometres across the top of the Greater Toronto Area, from Highway 403 in Oakville to Highway 48 in Markham. The first phase of the Highway opened in 1997 and runs from Highway 410 in Brampton to Highway 404 in Markham. It was constructed in a partnership between Canadian Highways International Corporation, a private company specializing in highway development, and the Province of Ontario. It is now owned by 407-ETR International Inc. Fees are 10¢ per kilometer during weekday peaks, 8¢ per kilometer during weekends and off-peak periods, and 4¢ per kilometer at night. About 70% of tolls are collected using electronic transponder cards that deduct charges from prepaid accounts, and 30% using a license plate photography billing system. Speeds on Highway 407 are about double that of parallel free highways. Peak-hour traffic volumes average 11,000 to 12,000 vehicles. Surveys indicate a high level of user satisfaction.

Variable Pricing Travel Impacts

Mobilizing the Region #324, Tri-State Transportation Campaign (www.tstc.org)

In February 2001 the Port Authority of New York & New Jersey changed from fixed to variable priced tolls (lower tolls during off-peak periods). In June 2001 they released a first-cut analysis of how its new electronic variably priced toll schedule has affected traffic and transit patterns at the agency’s Hudson River crossings and PATH. Although preliminary, the data suggests that the Port Authority’s substantial discounts (see table) for E-ZPass users (electronic toll collection), off-peak drivers and over-night truck drivers, and car-pools have already led thousands of travelers to make decisions that reduce traffic congestion.

Table 15 Port Authority Toll Facilities

	Cash	E-Z Peak	E-Z Off-Peak	E-Z Overnight
Cars	$6	$5	$4	N/A
Carpools	N/A	$1	$1	N/A
Trucks (Per Axle)	$6	$6	$5	$3.50

Although the off-peak price differences are modest ($1 per trip, a 16-20% discount), the effects have been significant. Comparing one typical day in May 2001 - less than 2 months after the variable pricing program went into effect - with a typical day in May 2000, the Port Authority analysis found that 7% fewer drivers used the agency’s bridges and tunnels during the morning peak hour period and that 4% fewer were traveling the crossings during the afternoon peak hours. These declines amount to 5,150 fewer vehicles in the morning’s most congested hours and 2,500 fewer during the early evening rush.

Significantly, the shift of traffic out of the peak hours was accompanied by an increase in off-peak travel, as well as by increased car-pooling and transit use. The same May-to-May analysis found that 7% more vehicles (+ 2,150) used Port Authority facilities between midnight and 6am in 2001, with roughly half of the total vehicle increase occurring between 5-6am. The agency also said there were “significant” gains in traffic between 3-4pm and that 3,350 more trips were made during the off-peak hours, 9am-3pm.

Also, 7% fewer trucks (-450) are traveling Port Authority crossings during the morning peak, while 4% more (+270) are traveling during the overnight hours of midnight to 6am. The shift out of the afternoon peak hours, at 50 trucks, is less significant.

“QuickRide” on the Katy Freeway (www.hou-metro.harris.tx.us/KATY.HTM)

Starting in January, 1998, 2-person carpools have been allowed to use the 3+ HOV lane of the Katy Freeway (Interstate 10) in Houston, Texas for a $2 per trip fee, under the “QuickRide” program. Tolls are collected electronically. Single-occupant vehicles are not allowed to use the HOV lane.

Stockholm Congestion Pricing (www.stockholmsforsoket.se/templates/page.aspx?id=183)

Starting in 3 January 2006 the city of Stockholm, Sweden, began charging vehicles entering the inner city area on weekdays between 6:30 a.m. and 6:30 p.m. 10 to 20 kronor (US$1.27 to US$2.54) per trip, with a maximum daily charge of 60 kronor (US$8.00). The system ran for seven months, and on 17 September 2006 Stockholm residents voted in favor of making the system permanent.

Although initially considered “political suicide,” the program is now considered successful overall by experts, media and the general public (Eliasson 2014). It reduced traffic volumes by about 25%, removing 100,000 vehicles from the roads during peak business hours and increasing public transit ridership by 40,000 users per day. About 350,000 vehicles per day pay the fee, generating between 3,500,000 and 21,000,000 kronor (US $500,000 to $2.7 million) in daily revenue, not counting revenue from the 630 kronor (US $77) fee charged to those who forget to pay the tax. Retail sales in central Stockholm shops increased compared with the same month in 2005, including significant increases in grocery sales in central neighborhoods, which probably reflects increased purchases by area residents who are more likely to shop locally rather than drive to shop.

The system uses cameras positioned along city routes and the drivers are encouraged to outfit their cars with RFID transponders that interact with stations along the road. Cars that are not equipped with the device are photographed, matched to a motor vehicle database, and then billed by the integrated system. All eligible vehicles entering or leaving the charging zone are charged based on time of day, with fares highest during peak rush hours, and up to a maximum charge per day. Payment is made by a number of channels including by direct debit triggered by the recognition of an electronic tag that is loaned to drivers. Camera and number plate recognition technologies identify those vehicles without tags, and are also used to verify tag readings and provide evidence to support the enforcement of non-payers.

Urban Road Pricing Programs

Table 16 summarizes key features of recent urban road pricing programs.

Table 16 Summary of Urban Road Pricing (EIU 2006)

	Singapore	Oslo	London	Stockholm
Objective	Optimise the usage of road infrastructure	Fund new road and public transport infrastructure projects	Reduce congestion and fund investments in the London transport system	Reduce congestion, improve the environment and fund increased public transport
Pricing scheme	€0-2 per inbound trip; variable charge Monday-Friday 7.30-19.00	€1.5 per inbound trip; flat rate all days	€8-10 area charge per day, flat rate Monday- Friday 7.00-18.30	€1-2 per in- and outbound trip; variable charge Monday-Friday
Identification method	98% DSRC	90% DSRC	100% ANPR	50% DSRC 50% ANPR
Payment	Automatically deducted from pre-pay account	Most drivers pay via Autopass electronic payment collection system	Before midnight the day of passage, by SMS or Internet, or in shops	Within 14 days from the date of passage, in shops or banks or by Internet
Annual Revenue	€40m	€150m	€122m (net)	€85m
Future	GPS-based system in consideration, geographical expansion	Full payment automation, extension and variable pricing scheme considered	Western extension, DSRC pilot project	Trial to be extended and revenue used to fund bypass construction

Variable Bridge Toll Pricing (www.leewayinfo.com/variablepricing.htm)

The Cape Coral and Midpoint Bridges in Lee County, Florida have half price tolls in the times just prior and just following the peak hours as an incentive for motorists to adjust their travel times (the standard toll is $$0.50 to $1.00). The Variable Pricing discount is only available to those motorists who are participating in LeeWay and have a prepaid toll account. This project is supported by a federal Value Pricing grant that covers any revenue lost through toll discounts.

PRIMA (www.certu.fr/internat/peuro/prima/prima.htm)

PRIMA (PRIcing Measures Acceptance) is a European Project focusing on Road Pricing acceptance. It includes research in 8 European cities that are at different stages in Road Pricing development, including Oslo, Stockholm, Lyon, Marseille, Rotterdam, Barcelona, Zurich and Bern.

Norwegian Cordon Tolls (www.progress-project.org/Progress/tron.html)

Norway has Road Pricing in three of its urban centers: Trondheim, Oslo, and Bergen. In 1991, Trondheim—Norway’s third largest city with a population of 140,000—implemented a “toll ring” that surrounds the city’s downtown area. The toll ring has 12 toll stations and uses a total of 35 lanes. Each tollbooth operates with an electronic card system, used by 80% of drivers entering the city. The other 20% use coin machines or magnetic strip cards, which exist at all twelve booths. Rates range from U.S. $0.62 to $1.56, with a peak charge between 6:00 a.m. and 10:00 a.m. As a result of this pricing, inbound traffic has declined by 10% during toll periods while non-toll period traffic has increased by 9%. Weekday bus travel has increased by 7%. Revenues are being used for road infrastructure, public transit, and pedestrian and bicycle facilities.

European Pricing Research Case Studies (www.Transport-Pricing.Net)

The report Pricing European Transport Systems (PETS), funded by the European Commission, describes several case studies that were modeled, including several interregional, and two urban traffic management programs to control traffic congestion, crash risk and pollution emissions.

Some Congestion Pricing Around the World (www.transalt.org/campaigns/sensible/congestion.html)

Singapore (www.lta.gov.sg)

Key facts:

Population 3,665,920; city covers 647.5 sq km.
Total vehicles in city number approximately 707,000.
Charging area much smaller than London and divided into central business districts, where scheme applies from 7.30am to 7.00pm, and expressways/outer ring roads, where scheme applies from 7.30am to 9.30am.
ERP (Electronic Road Pricing) system introduced in 1998, though a manual road pricing system (with officers making visual checks at each entry point) introduced in 1975.
CashCard can be bought/topped up at retail outlets, banks, petrol stations and automatic machines, fixed to vehicle windscreen.
Different charges for different roads at different times automatically deducted from CashCard as vehicle passes under gantries .

Benefits:

Immediate reduction of 24,700 cars during peak and rise of traffic speed by 22%.
Total reduction of traffic in zone during charging period by 13% from 270,000 to 235,100 .
Reduced number of solo drivers.
Vehicle trips shifted from peak to non-peak.
ERP system cut down on previously paper-heavy system .

Melbourne (www.citylink.vic.gov.au and www.transurban.com.au)

Key facts:

Population 3.2 million; city covers 7,800 sq km.
‘CityLink’ Toll road 22 kilometres long, linking three of Melbourne’s arterial freeways, opened in 1999.
Average weekday number of transactions 650,000, reaping $AUD187 million in revenue.
Pre-paid e-tags mounted on windscreen, read by overhead gantries; toll statements mailed quarterly; accounts have to be topped up when balance falls below a certain level.
Purely automatic vehicle identification technology (similar to London) - no alternative of direct-payment toll booths.
Motorists not equipped with e-tags who do not pay by following midday have registration number recorded and sent to Traffic Camera Office along with digital image of the vehicle.
Offenders fined a flat fee of $100.

Benefits:

Congestion significantly reduced in north and west Melbourne.
Less pollution and safer conditions on local streets .
99.9% of vehicles captured electronically; 90% overall.

Trondheim

Key facts:

Population 140,000.
Charging area approximately 4km by 6km.
Fully automatic ‘toll ring’ was introduced in 1991 and subsequently divided into sectors.
Charging period 6am - 6pm, Monday to Friday.
Unmanned electronic toll booths deduct fee from windscreen-mounted unit each time vehicle enters toll zone or passes a toll point within the zone, rather than on daily basis.
Limits imposed on number of charges that can be made so that people who live close by the ring or who make very frequent crossings do not have huge bills.
Occasional users can pay by automatic coin machine or by ‘swipecard’ at barriered lanes.
Toll prices go up during peak rush hours and drivers are also charged a toll for passing from one sector of the toll ring to another.
Heavy Goods Vehicles pay a double toll.

Benefits:

Peak rush hour traffic immediately dipped by 10 per cent.
Revenues from the tolls have paid to improve roads and build bypasses to cut traffic congestion.
Income is also used to give commuters other options by upgrading public transit, building bicycle paths and even providing 200 free bicycles for use downtown.
Public opinion initially 72% opposed, dropping to 48% two months after launch and reducing to 36% by 1996.

Toronto

Key facts:

Population 4.3 million; city covers 100 sq km.
“407 ETR” toll road 79 km long just north of Toronto; further extensions scheduled to open in mid-2001; when complete, scheme will be 108 km in total.
Over 263,000 average weekday trips.
All-electronic, open access toll highway; vehicles charged per kilometre; no minimum charge; billing retrospective on a monthly basis.
Users can choose to have transponder mounted on windscreen, read by overhead gantries; or pay $2 non-transponder charge per trip to have number plates read by license plate recognition system also located on gantries (70% of tolls collected by electronic transponder and 30% by license plate system).

Benefits:

Congestion relieved throughout overloaded highway system in area.
Speeds double those of similar, free highways.

German Government Approves Tolls for Trucks

In August 2001 the German cabinet has approved plans drawn up by transport minister Kurt Bodewig that will introduce tolls on trucks using roadways beginning in 2003. Vehicles over 12 tons would be required to pay euros 0.14-0.19 (0.12-0.16 US dollars) per kilometer, with variation depending on exhaust emissions and axles. The intent of the plan is to shift the financing of road use away from the general taxpayer and onto heavy road users. The toll rate was established by computing the costs of the extra wear and tear on roads and maintenance costs incurred by trucks. Revenue from the tolls will be used for further transport investment, including an anti-congestion program. Nature conservation group Nabu applauded the plan but urged the government to consider putting the revenue into something other than road building. (ENDS Environment Daily, August 16, 2001) For more information see the German transport ministry website at www.bmvbw.de.

Converting Flat Tolls to Congestion Pricing (www.tstc.org/MTApricing.pdf)

When the MTA, New York region’s transportation authority, announced plans to increase its bridge and tunnel tolls from $3.50 to $4.00 per trip, the Tri-State Transportation Campaign proposed an alternative plan that involves leaving off-peak tolls at $3.50 and increasing peak-period tolls to $5.00. Their study, using analysis of the price sensitivity of motorists to bridge tolls in the region, indicates that this congestion pricing would provide an equivalent amount of revenue but would save an average of 1-2 minutes per peak-period trip, providing travel time savings benefits worth an estimated $36 million annually.

Tollway Trial at a Dead End in California

Pay-as-you-go highways have become a political nightmare. But backers say that with new approach, the roads can live up to early hype.

Dan Weikel, Los Angeles Time, July 7 2002

Political and financial problems have led many state leaders to conclude that California’s nearly two-decade experiment with toll roads has failed, despite fervent hopes and vast investments. When the state first embraced toll roads, think tanks, politicians and government officials couldn’t find enough superlatives to describe them. Whether government-run or privately owned, toll roads were transportation’s future--an effective way to build highways when the state had little money for new construction. So enthusiastic was the Legislature that it helped create seven of them--five in Orange County.

Today, the governor says “Freeways should remain free.” California legislators speak openly of scrapping the toll-road experiment. Even the most ardent supporters are tempering their positions. “I’ve been burned, and the public has been burned by the whole thing,” said state Sen. Tom McClintock (R-Thousand Oaks), who supported legislation that approved the 91 Express Lanes on the Riverside Freeway and three other privately owned tollways. “We must never allow the state’s obligation to build a first-rate public highway system to be compromised again.”

The Express Lanes created such a political nightmare that the Orange County Transportation Authority wants to buy the project and put it into the public’s hands. Three other toll roads in the county are struggling with lower-than-expected revenue. A fifth proposed tollway in Orange County and another in the Bay Area have been stalled by political opposition and financial problems.

The only tollway project untainted by controversy is a proposed segment of California 125 near the Mexican border in San Diego County. It may provide the last chance to prove that a privately owned toll road can work in California. Construction on the $425-million highway is scheduled to begin by year’s end.

Toll road advocates concede that the experiment has not gone well. But they say tollways remain a viable alternative in a state struggling to meet its growing transportation demands. Federal and state gas taxes, supporters say, will not provide enough money to pay for billions of dollars in needed highways. And the state, they note, had to close a $23-billion budget gap this year.

“There probably isn’t much support for this idea anymore. That is a shame,” said Irvine City Councilman Mike Ward, who sits on the OCTA board of directors. “When a mistake is made, the pendulum always swings too far the other way.”

McClintock and other disaffected politicians should not be so hard on the measures they helped to make law, Ward said, because they supplied necessary freeways much faster and cheaper than the state could.

UT Group Proposes Initiative To Curb Traffic Congestion In Austin, Texas

Daily Texan, Dec 02, 2002 (www.dailytexanonline.com)

UT civil engineering professor and a group of graduate students are trying to solve Austin’s chronic traffic problems. Drivers travel during peak hours too much and the result is a perpetual traffic jam, said Kara Kockelman, an assistant professor in the transportation faction of the civil engineering department.

Kockelman has devised a plan to limit the amount of travelers during peak hours - weekday mornings from 7:30 a.m. to 9:30 a.m., and evenings from 4:30 p.m. to 6:30 p.m. on major highways in Central Texas.

The plan is based on credit-based congestion pricing, a system that regulates the amount of passage on a road by encouraging people not to drive. Every driver would be granted a trip budget for each month, which would account for a certain number of trips on the congested stretch of highway. For any excessive trip, the traveler would be charged a fee, and those not reaching their trip limit would collect money for staying off the highways. Drivers staying off the roads during traditional rush hours would pocket cash for their consideration, Kockelman said. “Congestion is the number one issue if you ask people locally,” Kockelman said. “We’re going to make a dent in it hopefully.”

Kockelman and a group of graduate students in the civil engineering department are surveying people around the city to get answers to some of their questions. The group wants to know the number of necessary passages most travelers need in a given week to get a sense of how the plan could fall into place.

Sukumar Kalmanje, a graduate student heading up the survey, said about 300 people have been polled so far. “We really want a lot of people to fill out the survey, because the whole idea of doing the survey is finding out who needs to make the most trips,” Kalmanje said. “The surveys that have come back have shown that people are open to this, and it is definitely something that people will be talking about in the coming years.” Kalmanje said a report could be completed in the next six months, and the group is hopeful about giving its input to city officials. “We would love to present something to the city,” he said.

Kockelman said travelers overuse the roads. Charging drivers for unnecessary trips or trips out of their budget would make travel more valuable and therefore encourage drivers to make fewer unnecessary trips.

World Bank Analysis of Toll Roads (Estache, Romero and Strong 2000)

A World Bank study came to the following conclusions about the prospects of privately finnanced toll roads:

The demand for road services will continue to grow and hence so will the need for investment. Worldwide, the stock of motor vehicles is growing at nearly three percent per year. Since the number of vehicle kilometers traveled tends to grow somewhat faster than the stock of motor vehicles, this implies that at least for some segments of the road network, the demand prospects are quite good. The fast urbanization of the developing world adds another dimension that cannot be ignored and explains the strong demand for urban access roads in many of the most populated countries of the world.

The challenge here is to bet on the right horses. Demand will increase but only on some segments of the network and it is tempting for a government to oversell a specific road based on aggregatetraffic growth prospects. Even holding the effects of toll levels constant, traffic volumes are very sensitive to income and economic growth. The failure to recognize this may be one of the main reasons why so many toll road projects have failed or ended in bitter renegotiations. Motorization and vehicle-kilometers traveled tend to increase faster than income levels. This high income elasticity, especially for leisure trips, makes toll roads especially sensitive to macroeconomic conditions. For roads that serve export activities, exchange rate changes can dramatically affect trade, leading to major changes in demand patterns.

Many toll road projects in the last decade have dramatically overestimated traffic levels. In some of the Mexican road concessions, traffic volumes were only one-fifth of the forecasted levels. In Hungary, the Ml Motorway attracted only fifty percent of its expected volume in its first year of operation. The Dulles Greenway, outside of Washington, only attracted one-third of its expected daily volume. Even after a toll reduction of forty percent, the Greenway still was only able to achieve two-thirds of its originally forecast volume.

A Better Way To Pay for Mobility in The Netherland (www.verkeerenwaterstaat.nl/english/topics/mobility_and_accessibility/roadpricing/index.aspx)

The Dutch government is phasing out the current vehicle tax (Motorrijtuigenbelasting or MRB) and vehicle sales tax (Belasting Personenauto’s en Motoren or BPM) and replacing them with a per-kilometre fee to finance roadway infrastructure. Motorists who drive less will pay less, and those who drive more will pay more. Cars that pollute more will be more expensive than cleaner cars. Total government revenues will not increase. This is considered fairer and more efficient than the current system, which imposes very high vehicle ownership taxes. The program is therefore deliberately named “a Different Way of Paying for Mobility.” Implementation is planned for 2011.

Eventually, each vehicle will be fitted with a mobimeter that will record the number of kilometres driven and the charge payable (www.minvenw.nl/cend/dco/home/data/international/gb/eng1201.html). An open standard will be used, so the private sector can play an important role and incorporate ancillary services such as travel information, automatic breakdown notification and payment for parking. A public/private platform is to be set up in order to develop such services.

Congestion Relief Analysis (WSDOT, 2006)

A study by the Washington State Department of Transportation compared various potential congestion reduction strategies in its major urban areas, including highway capacity expansion, transit service improvements, High Occupant Vehicle priority lanes, and congestion pricing. The analysis found that the benefits of the other strategies increase if implemented with congestion pricing.

Traffic Choices Study (www.psrc.org/projects/trafficchoices)

The Traffic Choices Study is a federally funded pilot that tested new ways to combat traffic congestion and fund transportation. Representative drivers from throughout the Puget Sound region participated in the 18-month study. Four hundred and fifty vehicles from over 275 households were outfitted with an in-vehicle (taxi-like) metering device. The Traffic Choices Meter identified a vehicle's location and displayed the cost to use each road at the time it was approached. The results represent the value placed on road access by a random sample of diverse volunteer participants using key roads throughout the Puget Sound region.

The primary aims of the Traffic Choices Study were to (1) accurately describe the behavioral response to the congestion-based tolling of roadways, (2) better understand issues of policy related to the implementation of road tolling, and (3) test an integrated system of technical solutions to the problem of tolling a large network of roads without installing substantial physical hardware on the roadside. The study has met these goals and has begun to widely distribute the findings from the research. The following are key findings of this study:

1.1 Motorists made small-scale adjustments in travel that, in aggregate, would have a major effect on transportation system performance.

1.2 When approached systematically, variable road tolling, with investments of toll revenues, could make excessive reoccurring congestion a thing of the past.

1.3 The scale of the revenues confirms the theoretical expectation that “optimal” tolls would support expanding transportation supply when and where it is needed most.

1.4 While most revenues are generated on a small portion of the toll roads, the secondary road network (arterials) should not be ignored, as diversion causes real problems with revenue loss and displaced traffic.

1.5 Users demonstrating a willingness to pay for high value roadways could expect that improvements would be forthcoming.

1.6 Done right, network tolling could provide broad benefit, including lower vehicle emissions, fewer accidents, travel time savings, improved roadway performance reliability, and lower operating costs.

1.7 A conservative analysis of the benefits of network tolling in the Puget Sound region indicates that the present value of net benefits could exceed $28 billion over a 30-year period.

Congestion Pricing Cost Savings (FHWA 2004)

The 2004 U.S. Federal Highway Administration’s Conditions and Performance report estimated that approximately $79 billion annually (constant dollars) would be needed to preserve the Interstate Highway System. Optimal congestion pricing would reduce the costs of achieving the same performance to $57 billion by reducing peak-period traffic volumes. If the $22 billion in estimated annual congestion pricing revenues were dedicated to highway and bridge construction and maintenance, the need for other funding (such as fuel taxes or general revenue) would decline to $35 billion, saving approximately a trillion dollars over the 20-year planning period.

Pay-As-You-Drive in the Netherlands (www.verkeerenwaterstaat.nl/english/topics/mobility_and_accessibility/roadpricing/index.aspx)

In 2008 the Netherlands government committed to implementing a new electronic road pricing system that charges vehicles based on its environmental characteristics, and the time and place of each journey, with higher rates under congested conditions. An independent government agency will be set up to administer the payments, which is expected to begin in 2011. This will replace the current vehicle tax (Motorrijtuigenbelasting or MRB) and vehicle sales tax (Belasting Personenauto’s en Motoren or BPM). Motorists who drive less will pay less, and those who drive more will pay more. Cars that pollute more will be more expensive than cleaner cars. Total government revenues will not increase. This is considered fairer and more efficient than the current system, which imposes very high vehicle ownership taxes. The program is therefore deliberately named A Different Way of Paying for Mobility. Eventually, each vehicle will be fitted with a mobimeter that will record the number of kilometres driven and the charge payable (www.minvenw.nl/cend/dco/home/data/international/gb/eng1201.html). An open standard will be used, so the private sector can play an important role and incorporate ancillary services such as travel information, automatic breakdown notification and payment for parking. A public/private platform is to be set up in order to develop such services.

Japanese Highway Tolls (www.mlit.go.jp/road/road_e/index_e.html)

Most of the Japanese highway network, totaling about 8,800 kilometers, has been tolled since 1952. Motorists pay a standard charge for entering the highway system, with an additional per-kilometre traveled fee.

CUPID (www.transport-pricing.net)

CUPID is a evaluation of urban road pricing, based on studies and experience from several European cities. This study will help in drawing up recommendations to support the implementation of future road pricing schemes, based around a set of 15 questions covering both scheme definition issues, such as ‘How much should be charged?’ and ‘Who should be charged?’ and implementation process issues such as ‘How can opposition be overcome?’ and ‘What can be learnt from previous attempts to introduce road pricing?’ Results are published in the CUPID newsletter (www.transport-pricing.net/download/cupidnews6.pdf).

Milan Road Pricing (www.internationaltransportforum.org/2014/awards)

The city of Milan, one of the most car-dependent in Europe, introduced a road pricing measure known as ‘Area C’ in January 2012, following a referendum in which 79% of voters supported the upgrade of an existing, limited charge to cover more vehicles and also a wider area.

Cars entering Milan’s ‘Area C’ are detected by a system of 43 electronic gates equipped with Automatic Number Plate Recognition (ANPR) technology. The fee charged per entry is €5 (US$7). Mopeds, motorcycles, electric cars, vehicles for disabled people as well as some other vehicle categories are exempted. Residents have 40 free accesses per year and pay €2 (US$2.80) from the 41st access.

The programme reduced congestion - vehicle accesses to ‘Area C’ fell by 28%. Demand for on-street parking is down by 10% and productivity for freight deliveries within Milan has increased by 10%. The number of road crashes with injuries fell by 26.3%. Emissions were also reduced: Particulate Matter (PM10) by 10% and CO₂ by 35%. The speed of public transport increased (bus: +6.9%, tram: +4.1%). Cars using ‘Area C’ were less polluting, with the share of cleaner vehicles rising from 9.6% of the total to 16.6%.

This program won the International Transport Forum’s 2014 Transport Achievement Award, which described it as “a significant achievement in improving the urban transport system.” The jury was particularly impressed by the way Milan succeeded in obtaining the political support of citizens: “After identifying that the existing congestion pricing scheme was no longer achieving its objectives, the Municipality of Milan had the foresight and political courage to design a more effective replacement, and the capability to implement this successfully.”

“This award is one of the most important recognitions for one of the main actions undertaken by our Municipality in order to improve the citizens’ quality of life”, said Milan’s Mayor Giuliano Pisapia. “Milan has proposed a model that has immediately become European and global best practice. In a very short time we obtained very satisfactory results in terms of traffic reduction and lowering of pollutant emissions. Another positive new trend is that citizens, tourists and city users are increasingly switching to public transport, which has been improved by the ‘Area C’ model.”

COMMENTARY

How Gothenburg Learned to Love Congestion Pricing (Nassen and Riise 2017)

A small but increasing number of cities have implemented congestion schemes and charges, including London, Milan, Singapore and Stockholm. What can we learn from Sweden’s second-largest city?

In 2013, Sweden’s second-largest city, Gothenburg, introduced congestion charges for cars. At that time, attitudes among commuters about the idea were very negative, even prompting some political turmoil. As time has passed, however, city residents’ views of the programme have become more favourable, among both car commuters and others.

Four years on, what can we learn from Gothenburg’s initiative? Research by Mistra Urban Futures and Chalmers University of Technology has made several notable findings. For instance, women who commuted by car before the congestion charge were twice as likely to change to another mode of transport following the introduction of the scheme, after controlling for relevant factors. Likewise, the relative accessibility of different transport modes had an important effect on which adaptation strategies people chose.

Perhaps most important, the researchers found no significant changes in travel satisfaction in any of the studied groups. The congestion charge may be unpopular for various reasons, but it does not seem to have any larger effects on everyday lives. Instead, people simply learn to adapt to it.

“How the Free Road Lobby Led Us Astray; Wrong Turn Left Us With Too Many Roads, Too High Taxes” (www.nationalpost.com/financialpost.asp?f=000530/302755&s2=fpcomment)

National Post May 30, 2000, by Lawrence Solomon

Canada has too many roads, and Canadians spend too much money building them. All told, according to StatsCan, roads and road vehicles account for almost 20% of total investments in the economy, making them one of our largest sectors. Yet our road system is nevertheless in serious disrepair -- the Canadian Automobile Association estimates 50% of our highway system needs refurbishing -- and gridlock threatens to paralyze our major centres.

The road lobby’s answer? Build new roads, rebuild old ones, do it on the double and keep roads free -- the same road map that brought us to the dead end we’re at. Free roads don’t provide the economic signals needed to determine what roads are needed and when; they allow politicians to build pet roads devoid of economic rationale. If we tolled our roads, instead of funding them through gasoline taxes, property taxes and general government revenues, we’d have fewer but better-maintained roads, we’d have fewer two-car families and we’d tend to drive our one car far more economically.

The Canadian Automobile Association sees things differently. It treats automobile mobility as a right and claims congestion is caused by too few roads, not by too many cars freeloading on free roads. The CAA wants to boost spending on road construction and maintenance dramatically. A 1998 federal study pegged the cost of upgrading the national highway infrastructure at $17-billion. The CAA, if it costed out its requests to expand the full road system, might be asking for $170-billion.

The CAA has company in demanding that governments rev up the concrete mixers and lay more asphalt. That’s also the demand of the Canadian Trucking Alliance, the Canadian Portland Cement Association, engineers, organized labour and other groups, many of them organized by the Canadian Construction Association into a lobby group called the Coalition to Renew Canada’s Infrastructure. Pointing out that the number of cars on the road rose by more than 20% between 1986 and 1998 while road length increased by only 7%, and that the United States is about to spend $300-billion revamping its transportation system, road lobbyists claim that the Canadian economy needs more roads. They also claim -- through sleight-of-hand accounting -- that governments rake in more money from gasoline taxes and other “user” fees than they spend on roads. To arrive at this conclusion, they exaggerate governments’ take from fuel taxes, for example by assuming the normal provincial sales tax shouldn’t apply to gasoline. And they ignore basic costs, such as the cost of financing the roads. A fuller accounting, as detailed in a 1999 report for Transport Canada, shows that drivers don’t fully pay their way, even ignoring indirect costs such as noise pollution and vehicle emissions.

You’d expect environmental groups, social activists and anti-car lobbies to promote measures that raise the costs of highways. But opposition to the highway lobby’s free ride also comes from the libertarian Cato Institute, a Washington-based organization that strongly promotes the free enterprise system and holds no distaste for the private automobile. In an exhaustive scholarly work by Robert L. Bradley entitled Oil, Gas, and Government, Cato documents the U.S. road lobby’s relentless role in seeing to the overbuilding of the U.S. highway system. Fifty years ago, organizations such as the American Automobile Association, trucking associations, the Asphalt Institute, the American Concrete Paving Association and the Big Three automakers banded together to promote “scientifically based, tax-free road building.” Their massive lobbying campaign in the 1950s swayed Congress to fund the largest public works program in U.S. history, 41,000 miles of interstate highway. To obtain congressional support, the highway system passed through 406 of the 435 congressional districts.

Free roads had high costs. “With full Road Pricing, transportation would have shifted to mass transit and other modes such as trains and airplanes. With fewer vehicles, particularly passenger cars, less lead, carbon monoxide and ozone-producing hydrocarbon pollution would have occurred. This would have improved air quality, particularly in major urban areas ... With greater transportation economies, motor-fuel prices could also have been lower for vehicle owners and for consumers across the energy spectrum,” concludes Mr. Bradley.

The free road movement in the U.S. in the 1950s arose just in time to squelch a major threat: the toll road movement, whose popularity alarmed the U.S. Public Road Administration and other government officials committed to conventional roads. After the Pennsylvania Turnpike and the Maine Turnpike proved popular with the driving public in the 1940s, pay roads swept the United States in the 1950s, with 2,500 miles built in 16 states. The trend then spread north to Quebec. The free road lobby’s success sent our transportation system on a detour that has lasted half a century.

Toll roads are now back – many are on the drawing boards in Canada and the United States. And so is the free road lobby.

Wit and Humor

The police officer sees a car weaving back and forth down the highway and he takes off after it and pulls up alongside and the driver is a little old lady and she’s knitting as she drives. He can’t believe it and he yells at her, “Pull over! Pull over!” and she says, “No, it’s a scarf!”

References and Resources for More Information

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Stuart Donovan (2011), Introducing Spitsmijden: Experiments With Peak Avoidance Incentives in The Netherlands, Victoria Transport Policy Institute (www.vtpi.org); at www.vtpi.org/spitsmijden.pdf.

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European Program for Mobility Management (www.epommweb.org) provides resources for transportation demand management planning and program development.

European Transport Pricing Initiatives includes various efforts to develop more fair and efficient pricing. Specific European transportation pricing projects are described below:

CAPRI (www.its.leeds.ac.uk/projects/capri) is disseminating research on transportation pricing.

CORDIS Project - Transport (www.cordis.lu/cost-transport/src/cost-342.htm) is a major European study of best practice in pricing and land use management policies to improve mobility and address energy and emission problems.

CUPID (Co-ordinating Urban Pricing Integrated Demonstrations), European Transport Pricing Initiative, Project No. GRD1-1999-10958, European Commission, Competitive and Sustainable Growth Programme (www.transport-pricing.net/reports22.html).

ExternE (http://externe.jrc.es) involves research into external costs of transport.

Generalization of Research on Accounts and Cost Estimates (www.grace-eu.org) is a research program developing methods of calculating marginal costs of road and rail transport and apply them to transport pricing reform in Europe.

IMPRINT: Implementing Pricing Reform in Transport (www.imprint-eu.org) and IMPRINT-NET (www.imprint-net.org) are efforts to promote implementation of fair and efficient transport pricing.

PETS (www.cordis.lu/transport/src/pets.htm) assesses current pricing of transport modes in European Union member countries.

REVENUE: Revenue Use from Transport Pricing (www.revenue-eu.org) assesses current practice of transport revenue use and develops guidelines for good use of the revenues from social marginal cost based pricing.

SPRUCTRUM (www.its.leeds.ac.uk/projects/spectrum) (Study of Policies regarding Economic instruments Complementing Transport Regulation and the Undertaking of physical Measures) is a research program to develop a framework for evaluating economic instruments, regulatory and physical measures to help achieve transport efficiency and equity objectives.

TRACE (www.hcg.nl/projects/trace/trace1.htm) provides costs of private road travel and their effects on demand, including short and long term elasticities. Sponsored by the European Commission, Directorate-General for Transport.

TRENEN (www.cordis.lu/transport/src/trenen.htm) is an effort to develop models for transport, environment and energy.

UNITE (www.its.leeds.ac.uk/projects/unite) involves transport cost accounting.

Jay Evans, Kiran Bhatt and Katherine Turnbull (2003), Road Value Pricing: Traveler Response to Transport System Changes, Transit Cooperative Research Program Report 95; Transportation Research Board (www.trb.org); at (http://trb.org/publications/tcrp/tcrp_rpt_95c14.pdf).

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David A. King, Michael Manville and Donald Shoup (2007), “The Political Calculus of Congestion Pricing,” Transport Policy, Vol. 14, No. 2 (http://shoup.bol.ucla.edu/PoliticalCalculus.pdf), March, pp. 111-123. Also see David A. King, Michael Manville and Donald Shoup (2007), “For Whom The Road Tolls,” Access, Number 31, University of California Transportation Center (www.uctc.net).

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John Walker (2011), The Acceptability of Road Pricing, Royal Automobile Club Foundation for Motoring (www.racfoundation.org); at www.racfoundation.org/assets/rac_foundation/content/downloadables/the%20acceptability%20of%20road%20pricing%20-%20walker%20-%20main%20report%20(may%2011).pdf.

Kevin Washbrook (2002), Lower Mainland Commuter Preference Survey, School of Resource and Environmental Management, Simon Fraser University (www.sfu.ca).

Clark Williams-Derry (2011), Toll Avoidance and Transportation Funding: Official Estimates Frequently Overestimate Traffic and Revenue for Toll Roads, Sightline Institute (www.sightline.org); at www.sightline.org/research/sprawl/toll-avoidance-and-transportation-funding.

This Encyclopedia is produced by the Victoria Transport Policy Institute to help improve understanding of Transportation Demand Management. It is an ongoing project. Please send us your comments and suggestions for improvement.

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Victoria Transport Policy Institute

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“Efficiency - Equity - Clarity”

#35

Description

Road Tolls

Congestion Pricing

Cordon (Area) Tolls

HOT Lanes

Vehicle Use Fees

Road Space Rationing

Strategy

How it is Implemented

Strategy

Travel Impacts

Benefits And Costs

Equity Impacts

Applications

Category

Relationships With Other TDM Strategies

Stakeholders

Barriers To Implementation

Best Practices

Examples and Case Studies

London Congestion Pricing (www.vtpi.org/london.pdf; Richards, 2006)

National Road Pricing

I-15 Electronic HOT Lanes (http://argo.sandag.org/fastrak)

SR 91 Express Toll Lanes (www.91expresslanes.com)

Highway 407 (www.407etr.com)

Variable Pricing Travel Impacts

“QuickRide” on the Katy Freeway (www.hou-metro.harris.tx.us/KATY.HTM)

Stockholm Congestion Pricing (www.stockholmsforsoket.se/templates/page.aspx?id=183)

Urban Road Pricing Programs

Variable Bridge Toll Pricing (www.leewayinfo.com/variablepricing.htm)

PRIMA (www.certu.fr/internat/peuro/prima/prima.htm)

Norwegian Cordon Tolls (www.progress-project.org/Progress/tron.html)

European Pricing Research Case Studies (www.Transport-Pricing.Net)

Some Congestion Pricing Around the World (www.transalt.org/campaigns/sensible/congestion.html)

Singapore (www.lta.gov.sg)

Melbourne (www.citylink.vic.gov.au and www.transurban.com.au)

Trondheim

Toronto

German Government Approves Tolls for Trucks

Converting Flat Tolls to Congestion Pricing (www.tstc.org/MTApricing.pdf)

Tollway Trial at a Dead End in California

UT Group Proposes Initiative To Curb Traffic Congestion In Austin, Texas

World Bank Analysis of Toll Roads (Estache, Romero and Strong 2000)

A Better Way To Pay for Mobility in The Netherland (www.verkeerenwaterstaat.nl/english/topics/mobility_and_accessibility/roadpricing/index.aspx)

Congestion Relief Analysis (WSDOT, 2006)

Traffic Choices Study (www.psrc.org/projects/trafficchoices)

Congestion Pricing Cost Savings (FHWA 2004)

Pay-As-You-Drive in the Netherlands (www.verkeerenwaterstaat.nl/english/topics/mobility_and_accessibility/roadpricing/index.aspx)

Japanese Highway Tolls (www.mlit.go.jp/road/road_e/index_e.html)

CUPID (www.transport-pricing.net)

Milan Road Pricing (www.internationaltransportforum.org/2014/awards)

How Gothenburg Learned to Love Congestion Pricing (Nassen and Riise 2017)

“How the Free Road Lobby Led Us Astray; Wrong Turn Left Us With Too Many Roads, Too High Taxes” (www.nationalpost.com/financialpost.asp?f=000530/302755&s2=fpcomment)

References and Resources for More Information